What caused LSPD's earnings volatility in 2025?

Lightspeed's earnings volatility in 2025 was primarily caused by a combination of macroeconomic challenges and strategic shifts:

1. **Macroeconomic Conditions**: The company faced a deteriorating macroeconomic environment, characterized by heightened inflationary pressures, increased job insecurity, and weakened consumer confidence. These factors led to a decline in same-store sales and new business formation, which in turn affected Lightspeed's transaction-based and subscription revenues.
2. **Strategic Shifts**: Lightspeed has been undergoing a strategic transformation, focusing on specific market segments such as North American Retail and European Hospitality. This strategic pivot likely involved significant investments in sales, marketing, and product development, which could have temporarily impacted short-term earnings but are crucial for long-term growth and profitability.
3. **Revenue Model Vulnerability**: Lightspeed's revenue model, heavily reliant on transaction-based revenue, made it sensitive to economic cycles. The decline in transaction-based revenue, which constitutes over 60% of total revenue, was a key factor in the revenue outlook revision. This vulnerability was exacerbated by the macroeconomic headwinds that affected consumer spending and, consequently, Lightspeed's revenue streams.

In summary, Lightspeed's 2025 earnings volatility was driven by a combination of macroeconomic challenges and strategic shifts, which together created a complex environment for the company's financial performance.